Cox and Kings: Shadow over Rs 21,000 crore transactions; siphoning nexus with Yes Bank unraveled

Cox and Kings audit: A forensic audit of bankrupt travel firm Cox and Kings has highlighted a slew of alleged irregularities, including falsifying records and sales worth Rs 9,000 crore to more than 160 bogus customers or ones who don't exist. The audit done in February 2020 by Pricewaterhouse Coopers (PWC) at the behest of Yes Bank has also thrown up alleged transactions of Rs 21,000 crore over four years to siphon funds, a Rs 1,100-crore loan that violated fiduciary norms as well as inflated bank balances.

The audit additionally said that most transactions between the company and Yes Bank were without "proper approvals", as mentioned by the Indian Express. Cox and Kings was one of the biggest borrowers of Yes Bank when Rana Kapoor was heading the bank. The bank has an exposure of Rs 2,267 crore to the travel company. The Enforcement Directorate had also summoned Ajay Ajit Peter Kerkar, the promoter of Cox and Kings in connection with the case against Rana Kapoor, who is believed to have taken kickbacks for granting loans.

The company that was sent to bankruptcy court in October 2019 owes Rs 5,500 crore to banks and financial institutions.

Also read: YES Bank needs up to Rs 13,000 crore equity in 2 years: ICRA

Even though the company had no business relationship with stressed firm Alok Industries that went bankrupt in 2017, Cox and Kings gave them Rs 1,100 crore. The Chief Financial Officer of Alok Industries was Sunil Khandelwal, brother of Anil Khandelwal, Cox and Kings CFO during the time of the loan, the daily states.

Cox and Kings also loaned Rs 589 crore to around 11 parties without executing loan agreements in financial year 2019.

The audit also stated that the company falsified financial statements between 2014 and 2019. It overstated its sales figures and understated its debt. It made bogus sales of Rs 5,278 crore to 147 customers between 2014 and 2019. Of these, at least 141 are not registered with the GST department.

Moreover, Cox and Kings made a substantial portion of its Rs 3,908 crore of sales between 2016 and 2019 from 15 customers, who the report found, were non-existent. The addresses were found to be residential and no travel company had ever operated from there. While the ledgers show Rs 2,548 crore from these customers, there were no funds traced to the bank accounts. Between April 2014 and June 2015, Cox and Kings recorded sales of Rs 250-260 crore against these 15 customers.

Cox and Kings showed cash balance of Rs 723 crore and bank balance of Rs 1,830 crore on standalone and consolidated levels respectively for FY19. Despite this, the company defaulted on loan payments since June 2019.

The travel company also did not disclose a credit card debt of Rs 750 crore for FY19 to its lenders.

Also read: Yes Bank case: Rana Kapoor seeks bail, says may contract coronavirus in jail